Rupert Murdoch’s grip on News Corporation seemed to weaken on Wednesday, after a breach of US law forced the media conglomerate to suspend the voting shares of some of the 81-year-old’s biggest allies.
In a statement, News Corp said that in order to comply with foreign ownership rules relating to the US 1934 Communications Act, it was suspending 50% of the class B voting rights of its non-US investors.
During routine reviews of its shareholder structure in the lead-up to renewal of certain broadcast licences, the company said it had found that foreign investors held approximately 36% of class B voting stock – well past the 25% limit allowed by the act.
In a statement, the family-controlled business said: “The suspension of voting rights will remain in place for as long as the company deems it necessary to maintain compliance with US law.”
One of the Murdoch family’s staunchest supporters, Prince Alwaleed bin Talal, is among those affected. He was News Corp’s second biggest shareholder, holding about 7% of voting rights.
The Murdoch family holds just under 40% of voting rights – effectively meaning that it was impossible, so long as the prince voted with the family, for outside shareholders to have an affect on the business.
However, in order to fend off criticism over control, the Murdochs have agreed to cap their voting powers at 39.7%, the number held prior to the suspension.
“The Murdoch Family Trust and K Rupert Murdoch (together the Murdoch family interests) have entered into an agreement with the company not to vote or provide voting instructions with respect to a portion of the shares of Class B common stock they own during the voting rights suspension period, to the extent that doing so would increase their percentage of voting power from what it was prior to the suspension,” the statement said.